What's Driving Pound (GBP) Movement This Week?

Last week’s significantly stronger-than-anticipated UK services PMI, coupled with the Bank of England raising the UK’s growth forecast, saw the Pound put in a commendable performance against peers including the US Dollar and Euro.

The British currency was able to post a five-day gain against its most traded counterparts and began this week supported.

The expectation that tomorrow’s UK home price gauge will show that home values reached their highest level for over three years in July helped the Pound start the European session slightly stronger against the Euro and relatively unchanged against the US Dollar.

Other pertinent UK data to watch out for this week includes tomorrow’s consumer price and producer price indexes, the publication of the Bank of England’s meeting minutes and UK employment figures on Wednesday and Thursday’s retail sales report.

The UK economy is forecast to have added 34,000 jobs in June, with the unemployment rate holding at 2.8 per cent, while retail sales are expected to have increased by 0.6 per cent month-on-month following June’s gain of 0.2 per cent.

If UK data continues to surprise to the upside the Pound could extend recent gains.

However, the Bank of England’s meeting minutes will be of particular interest. Last month’s minutes revealed that new BoE Governor Mark Carney and the rest of the Monetary Policy Committee were in agreement regarding maintaining the current level of asset purchases and holding the benchmark interest rate at a record low.

Further signs of accord among the MPC will support Sterling, but any signs of dissention in the ranks could prove damaging to the British asset.

Bearish references to the UK’s economic progress could also cause the Pound to pare recent gains.

Data from the Eurozone, including growth figures for German and the 17-nation currency bloc as a whole, are also likely to drive GBP/EUR movement.